International Monetary Fund Managing Director Christine Lagarde checks some pyramid stones next to security guards on August 22, 2012.(Asmaa Waguih/Reuters)

Egypt's political dilemmas are based, in important part, on its economic dilemmas. But since the overthrow of the Morsi government, far less attention has been paid to crucial economic issues than the political and constitutional conflicts. But economic issues--and the lack of a legitimated economic vision--have been as much a cause of the unrest, change and uncertainty in Egypt, and during both the Mubarak and Morsi tenures. And they may be more intractable.

Any new permanent government will face the choice Morsi had but never made: between market economic reforms on the one hand, led by economists and business people to promote growth, jobs, and trade, and a command-and-control statist economy on the other, which provides subsidies for essentials like energy and staples like bread, rice, and sugar--and also provides sinecures for ex-military officers. Part of the problem is that "liberalizing" reforms--there have been three waves since the end of Nassar's regime than 40 years ago--are perceived as helping the rich and reflecting crony capitalism, rather than raising Egypt as a whole.

Morsi's inability to chart a clear economic path led to a significant worsening of Egypt's economic straits, which in turn helped mobilize the powerful street opposition. From just before 2011 to today: GDP growth is down (from nearly 6 percent to under 2 percent); unemployment is up (from 9 percent to over 13 percent); foreign exchange reserves are down (from $35 billion to just under $15 billion); the budget deficit has more than doubled (from nearly 110 billion Egyptian pounds to over 230 billion); a quarter of that budget are subsidies to poor and middle class; and the poor and near-poor total approximately half of the population. Tourism is down significantly due to security concerns; direct foreign investment has declined sharply; gasoline and power shortages bedevil the population; a slide in the Egyptian currency has raised prices of foreign goods such as food imports; wealth distribution is badly skewed; the nation's credit rating is cratering; the hidden "black" economy constitutes as much as 40 percent of Egyptian economic activity. And corruption continues.

The critical economic issue is not the scope of the problems but what to do about them--a subject lost in the political swirl, but essential to any future regime stability. As with constitutional and political reform, a consensus economic program must resolve deep conflicting interests: between liberal elite capitalists and the military elite, between competitive enterprises and huge state subsidies for energy and food; between a private-sector middle class and a government-employed middle class that makes up fully one third of the workforce; between the 45 million Egyptians under 35, poor or professional, and those who control the economy through what the young regard as corrupt and non-meritocratic means; between urban and rural; between a variety of secular and Islamic views of the economy.

In the fall of 2011, the International Monetary Fund proposed one set of reforms as part of $4.8 billion standby agreement aimed at creating economic growth. More than $5 billion in additional funds from the EU and the U.S.--beyond the current $1.3 billion in military assistance--were to follow. The IMF conditions included the following controversial items: removing energy subsidies for all but the poor; raising revenue through a broadly applicable value-added tax; using those funds to reduce the budget deficit and increase infrastructure spending; reducing a bloated bureaucracy; and significantly increasing transparency in government budgeting and finance--transparency that in Egypt would threaten longstanding corrupt activities.

Morsi initially agreed to the IMF conditions. But within three weeks, he stunningly renounced the agreement because of strong opposition to reduced subsidies and new taxes on many Egyptians and because many criticized the lack of transparency in IMF negotiations. The depths of controversy on the reforms simply overwhelmed an economic way forward. All this occurred before the first anniversary of the original Tahrir Square demonstrations. Egyptian economic reform was effectively dead.

With no new IMF, EU, or U.S. funds, the Morsi government received about $8 billion in stopgap funding from Qatar and, in smaller amounts, Turkey and Libya. None of that financing imposed any economic reform conditions. Today, with those nations critical of the Morsi government's demise, it appears that Saudi Arabia and the United Arab Emirates, both of them critics of the Moslem Brotherhood, will step up to provide billions in emergency funding. But again, it seems unlikely that these funds will come with any demands for economic reforms.

So the economic dilemmas are, for the foreseeable future, likely to remain acute. It is hard to imagine that the current interim government will take any of the major reform steps that would inevitably create winners and losers--even though a moderate and experienced Egyptian economist, Hazem el-Beblawi, will be interim prime minister. And a revised constitution, duly elected parliament, and newly chosen president are not likely to be in place until sometime next year. Already, the interim government's recent proposals for these fundamental processes are being widely criticized.

If and when a constitutionally based and fairly elected government takes office next year, it will still have an extraordinary challenge addressing the economic dilemmas and conflicts embedded in reducing subsidies, trimming the government, raising revenues, rejuvenating the private sector, limiting the military's commercial activities/sinecures, and dealing with endemic corruption and the black economy. Without a broad consensus on an economic plan, the IMF, EU, and U.S. are not likely to provide funding tied to such reforms. And funds from Arab nations may forestall basic economic issues--but not resolve them.

A government that can create a societal consensus on an economic way forward seems more distant today than in the heady period of the first Tahrir Square demonstrations, two and a half years ago. The world will watch to see if Egypt can avoid economic, not just constitutional, tragedy.

About the Author

Ben Heineman Jr. is is a senior fellow at the Belfer Center for Science and International Affairs, in Harvard's Kennedy School of Government, and at the Harvard Law School's Program on Corporate Governance. He is the author of High Performance With High Integrity.

Most Popular

Congressional Republicans and conservative pundits had the chance to signal to Trump that his attacks on law enforcement are unacceptable—but they sent the opposite message.

President Trump raged at his TV on Sunday morning. And yet on balance, he had a pretty good weekend. He got a measure of revenge upon the hated FBI, firing former Deputy Director Andrew McCabe two days before his pension vested. He successfully coerced his balky attorney general, Jeff Sessions, into speeding up the FBI’s processes to enable the firing before McCabe’s retirement date.

Beyond this vindictive fun for the president, he achieved something politically important. The Trump administration is offering a not very convincing story about the McCabe firing. It is insisting that the decision was taken internally by the Department of Justice, and that the president’s repeated and emphatic demands—public and private—had nothing whatsoever to do with it.

The first female speaker of the House has become the most effec­tive congressional leader of modern times—and, not coinciden­tally, the most vilified.

Last May, TheWashington Post’s James Hohmann noted “an uncovered dynamic” that helped explain the GOP’s failure to repeal Obamacare. Three current Democratic House members had opposed the Affordable Care Act when it first passed. Twelve Democratic House members represent districts that Donald Trump won. Yet none voted for repeal. The “uncovered dynamic,” Hohmann suggested, was Nancy Pelosi’s skill at keeping her party in line.

She’s been keeping it in line for more than a decade. In 2005, George W. Bush launched his second presidential term with an aggressive push to partially privatize Social Security. For nine months, Republicans demanded that Democrats admit the retirement system was in crisis and offer their own program to change it. Pelosi refused. Democratic members of Congress hosted more than 1,000 town-hall meetings to rally opposition to privatization. That fall, Republicans backed down, and Bush’s second term never recovered.

Invented centuries ago in France, the bidet has never taken off in the States. That might be changing.

“It’s been completely Americanized!” my host declares proudly. “The bidet is gone!” In my time as a travel editor, this scenario has become common when touring improvements to hotels and resorts around the world. My heart sinks when I hear it. To me, this doesn’t feel like progress, but prejudice.

Americans seem especially baffled by these basins. Even seasoned American travelers are unsure of their purpose: One globe-trotter asked me, “Why do the bathrooms in this hotel have both toilets and urinals?” And even if they understand the bidet’s function, Americans often fail to see its appeal. Attempts to popularize the bidet in the United States have failed before, but recent efforts continue—and perhaps they might even succeed in bringing this Old World device to new backsides.

How evangelicals, once culturally confident, became an anxious minority seeking political protection from the least traditionally religious president in living memory

One of the most extraordinary things about our current politics—really, one of the most extraordinary developments of recent political history—is the loyal adherence of religious conservatives to Donald Trump. The president won four-fifths of the votes of white evangelical Christians. This was a higher level of support than either Ronald Reagan or George W. Bush, an outspoken evangelical himself, ever received.

Trump’s background and beliefs could hardly be more incompatible with traditional Christian models of life and leadership. Trump’s past political stances (he once supported the right to partial-birth abortion), his character (he has bragged about sexually assaulting women), and even his language (he introduced the words pussy and shithole into presidential discourse) would more naturally lead religious conservatives toward exorcism than alliance. This is a man who has cruelly publicized his infidelities, made disturbing sexual comments about his elder daughter, and boasted about the size of his penis on the debate stage. His lawyer reportedly arranged a $130,000 payment to a porn star to dissuade her from disclosing an alleged affair. Yet religious conservatives who once blanched at PG-13 public standards now yawn at such NC-17 maneuvers. We are a long way from The Book of Virtues.

As the Trump presidency approaches a troubling tipping point, it’s time to find the right term for what’s happening to democracy.

Here is something that, even on its own, is astonishing: The president of the United States demanded the firing of the former FBI deputy director, a career civil servant, after tormenting him both publicly and privately—and it worked.

The American public still doesn’t know in any detail what Andrew McCabe, who was dismissed late Friday night, is supposed to have done. But citizens can see exactly what Donald Trump did to McCabe. And the president’s actions are corroding the independence that a healthy constitutional democracy needs in its law enforcement and intelligence apparatus.

McCabe’s firing is part of a pattern. It follows the summary removal of the previous FBI director and comes amid Trump’s repeated threats to fire the attorney general, the deputy attorney, and the special counsel who is investigating him and his associates. McCabe’s ouster unfolded against a chaotic political backdrop which includes Trump’s repeated calls for investigations of his political opponents, demands of loyalty from senior law enforcement officials, and declarations that the job of those officials is to protect him from investigation.

Much more than time separates the 27th president from the 45th: from their vastly different views on economics, to their conceptions of the presidency itself.

As Donald Trump’s executive orders punishing steel and aluminum imports threaten a trade war around the globe, Republicans on Capitol Hill are debating whether to reassert Congress’s ultimate constitutional authority over tariffs and trade. This isn’t the first time the GOP has split itself in two on the question of protective tariffs. But the last time, just over 100 years ago, the Republican president’s policies were the exact opposite of Trump’s.

William Howard Taft—in his opposition to populism and protectionism, as well as his devotion to constitutional limits on the powers of the presidency—was essentially the anti-Trump. Unlike the current president, and his own predecessor, Theodore Roosevelt, Taft refused to rule by executive order, insisting that the chief executive could only exercise those powers that the Constitution explicitly authorizes.

Among the more practical advice that can be offered to international travelers is wisdom of the bathroom. So let me say, as someone who recently returned from China, that you should be prepared to one, carry your own toilet paper and two, practice your squat.

I do not mean those goofy chairless sits you see at the gym. No, toned glutes will not save you here. I mean the deep squat, where you plop your butt down as far as it can go while staying aloft and balanced on the heels. This position—in contrast to deep squatting on your toes as most Americans naturally attempt instead—is so stable that people in China can hold it for minutes and perhaps even hours ...

The debate around sexual-harassment legislation is playing out in the Maryland General Assembly, where reform advocates say leadership is loath to embrace changes.

In Maryland, legislative sessions run 90 days, from January through early April. On the final day of each session—commonly referred to by the Latin term sine die—the capital city of Annapolis lets its hair down. There is dining and dancing and parties galore as aides, lawmakers, and lobbyists celebrate having survived the season.

A few years back, at one sine die soiree hosted by a legislator, a former Annapolis aide (who requested anonymity because she remains involved in Maryland politics) took to the dance floor. “I was dancing a little bit by myself,” she recalled. “All of a sudden I hear, ‘You’re packing a little bit more than I thought back here!’ I turn around, and this legislator is dancing right behind me. I was like, ‘Ooookay. This is a little weird. I know your wife and kids.’ So I tried to subtly move away.” The legislator followed, recalled the ex-aide. And then: “He got aroused.” The young woman made a swift escape, and, she informed me, “I have not spoken to that legislator one-on-one since.”

Scholars have been sounding the alarm about data-harvesting firms for nearly a decade. The latest Cambridge Analytica scandal shows it may be too late to stop them.

On Friday night, Facebook suspended the account of Cambridge Analytica, the political-data company backed by the billionaire Robert Mercer that consulted on both the Brexit and Trump campaigns.

The action came just before The Guardian and The New York Timesdropped major reports in which the whistle-blower Christopher Wylie alleged that Cambridge Analytica had used data that an academic had allegedly improperly exfiltrated from the social network. These new stories, backed by Wylie’s account and internal documents, followed years of reporting by The Guardianand The Intercept about the possible problem.

The details could seem Byzantine. Aleksandr Kogan, then a Cambridge academic, founded a company, Global Science Research, and immediately took on a major client, Strategic Communication Laboratories, which eventually gave birth to Cambridge Analytica. (Steve Bannon, an adviser to the company and a former senior adviser to Trump, reportedly picked the name.)

The Supreme Court will consider the rights of crisis pregnancy centers, which help women “imagine what the choice of life would be like.”

Abortion is back in the Supreme Court this week. On Tuesday, the justices will hear a case on crisis pregnancy centers, the facilities established by pro-life organizations around the country to counsel women against abortion. In 2015, California passed the Reproductive FACT Act, requiring licensed clinics that provide certain services—including ultrasounds, pregnancy tests, and advice on birth control—to post information about affordable abortion and contraception services offered by the state. Unlicensed facilities that provide these services have to disclose their lack of medical certification. A network of crisis pregnancy centers, including the National Institute of Family and Life Advocates (NIFLA), sued in response, arguing that the government is violating their right to free speech by forcing them to promote abortion.